Useful Information

Free trade agreements (FTA)

An important task of the Ministry of Foreign Affairs of Ukraine is to provide diplomatic maintenance and assistance in holding negotiations on concluding bi- and multilateral free trade agreements (further - FTA).

The FTA conclusion provides the creation of favorable conditions for development of trade and economic cooperation with the certain states or groups of states and therefore is the efficient instrument for increasing the Ukrainian export volume through the liberalization of access of goods and services on foreign markets. The establishing a free trade regime with the perspective trade and economic partners allows Ukraine to diversify geography and range of national export production due to liberalized terms of market accession in the long term.

First of all, the FTA conclusion pursues the aim of advance and protection of economic interests of the Ukrainian producers and exporters and also provides balanced tariff policy, including, in relation to sensitive groups of industrial and agricultural goods which have to become a basis of creating favorable conditions for the development of commerce and economic cooperation.

Creation of Deep and Comprehensive FTA between Ukraine and the European Union is provided by the economic part of EU- Ukraine Association Agreement, which was signed on June 27, 2014.

The Agreement on free trade between Ukraine and the states of EFTA (Switzerland, Norway, Iceland and Liechtenstein) was signed at Reykjavík (Iceland) on June 24, 2010; ratified by the Law of Ukraine No. 4091-VI of December 07, 2011 and came into force on June 1, 2012. The present Agreement covers trade in goods (industrial, agricultural, fish and sea production), services and settlements of disputes. Given the difference between economic and social development levels of Ukraine and EFTA member states the agreement provides the principal of asymmetrical obligations of the Parties which allows Ukraine to adapt its trade with the EFTA states with the free trade terms.

Two more documents were signed in the scope of Agreement in order to render technical and financial assistance to the Ukrainian Party for adaptation to the new terms of trade, namely: the Memorandum of understanding concerning the Program of bilateral cooperation in agriculture between the Ministry of Agrarian Policy and Food of Ukraine and the Swiss State Secretariat for Economic Affairs; and the Joint Statement on cooperation in the field of fisheries between the State Agency of Fisheries of Ukraine, the Ministry of Fisheries and Agriculture of Iceland and the Ministry of Fisheries and Coastal Affairs of Norway.

The free trade area between Ukraine and Georgia is valid since 1996 under the Agreement between the Government of Ukraine and the Government of Democratic Republic of Georgia on January 09, 1995 (came into force on June 04, 1996), and also under the intergovernmental Protocol on modification and additions in the Agreements specified on June 17, 2009 that is connected with Georgia's withdrawal from the CIS.

The Agreement on free trade between the Government of Ukraine and the Government of Montenegrowas signed at Kiev on November 18, 2011 and was also ratified by the Law of Ukraine No. 5445-VI of October 16, 2012; became effective on January 01, 2013. The present Agreement covers trade in goods, services and settlements of disputes. Under the terms of the Agreement after the entry into force, Montenegro provides abolition of the import duties. Thus, for the purpose of prevention of potential negative consequences for the economy of Ukraine, the Ukrainian party within the Agreement excluded a number of sensitive groups of agricultural goods from the free trade area. Also, the right for application of export duties by Ukraine according to the existing obligations within the WTO is kept.

The Agreement on free trade between the Republic of Macedonia and Ukraine was signed at Skopje on January 18, 2001 and was ratified by the Law of Ukraine No. 2599-III of July 05, 2001. The present Agreement covers the removal of trade restrictions in industrial and agricultural goods, providing conditions for the fair competition in trade, creation of conditions for further investment promotion, development of joint investment projects, and also protection of intellectual property and cooperation between the Parties in the markets of the third countries.

The concluded FTAs promote the free movement of goods and services between the countries that, in turn, promotes attraction of investments, reduction in cost of import, development of domestic production and infrastructure, exchange of experience and technologies, provides employment of the population, receipt in budgets of taxes and fees and maintenance of close interstate connections.

The negotiation processes under way

For the time being, negotiation processes on the conclusion of bilateral FTAs between Ukraine and Canada, Turkey and State of Israel are under way.

The work on determination of economic expediency of the conclusion of FTAs with other important trade partners of Ukraine is being conducted. Along with the carrying out the corresponding scientific researches we try to define the perspective countries for the FTAs conclusion through the consultations with business associations and leading producers and exporters of Ukraine.

The Deep and Comprehensive Free Trade Area (DCFTA) is part of the Association Agreement (AA) between the EU and Ukraine, one of EU's the most ambitious bilateral agreements. The DCFTA offers Ukraine a framework for modernising its trade relations and for economic development by the opening of markets via the progressive removal of customs tariffs and quotas, and by an extensive harmonisation of laws, norms and regulations in various trade -related sectors, creating the conditions for aligning key sectors of the Ukrainian economy to EU standards.

The key elements of the DCFTA:

Market Access for Goods

It aims to remove customs duties on imports and exports. The vast majority of customs duties on goods will be removed as soon as the Agreement enters into force. For industrial goods it foresees the immediate removal of existing tariffs on most products, with exceptions for a few for which a transition period exists. For agricultural goods, ambitious concessions have been made taking into account specific sensitivities. Thus, duty-free tariff rate quotas been granted to the Ukraine for cereals, pork, beef, poultry and a handful of additional products, while for others the progressive elimination by the EU of the custom duties will occur over a longer transition period (generally 10 years). This means that for particularly sensitive sectors, the DCFTA gives producers more time to adapt to a more competitive environment while offering consumers a wider choice of products at lower prices.

It aims to reduce obstacles to trade arising from Technical Barriers to Trade (TBT): technical regulations, standards, conformity assessment procedures and similar requirements. Ukraine has progressively adapt its technical regulations and standards to those of the EU.

This chapter seeks to enhance cooperation in customs and customs-related matters and to simplify customs requirements and formalities, while at the same time preventing fraud.

Establishment, trade in services and electronic commerce

The chapter aims to integrate Ukraine as much as possible into the

EU market. Unlike classical FTAs, it provides for both the freedom of establishment in services and non-services sectors, subject to limited reservations, and the expansion of the internal market for a set of key services sectors once Ukraine effectively implements the EU - acquis.

Current payments and movement of capital

Provisions on free movement of capital will include standard safeguards with a possibility to apply measures to ensure the stability of the financial system.

Public procurement

Ukraine will, over several years, adopt current and future EU legislation on public procurement. With the exception of defence procurement, Ukrainian suppliers and service providers will have full access to EU public procurement markets, and EU suppliers and service providers will have the same to the Ukrainian procurement market. The chapter is an unprecedented example of the integration of a Non-EEA-Member into the EU Single Market.

Intellectual property

This chapter includes provisions on particular copyright, designs (including unregistered ones), patents and geographical indications (GIs) which complement and update the TRIPS Agreement. The chapter has a strong section on enforcement of IPRs based on the EU's internal rules.

Competition

Here, the Parties prohibit and sanction certain practices and transactions which could distort competition and trade. Anti-competitive practices such as cartels, abuse of a dominant position and anti-competitive mergers will be subject to effective enforcement action.

Trade-related energy

This is the first FTA to include specific provisions on trade related energy issues. The chapter takes into account that Ukraine is already a member of the Energy Community Treaty (EnCT), which imposes an obligation to implement the most relevant EU energy acquis on electricity and gas. The chapter covers electricity, crude oil and natural gas (in gaseous state or as LNG), its provisions being subject to dispute settlement procedure.

- The establishment of enquiry or contact points to respond to questions arising from the application of regulations.

- Due process requirements regarding administrative proceedings, including the review or appeal of administrative actions in areas covered by the FTA.

Trade and sustainable development

Key elements of the Trade and Sustainable Development Chapter include for instance: Shared commitment to the core labour standards of the International Labour Organisation (ILO) and the ILO Decent Work Agenda; Commitment to implement all multilateral environment agreements to which the EU and Ukraine are party, and to promote sustainable management of forestry and fisheries.

Dispute Settlement

The Dispute Settlement mechanism is based on the model of the WTO Dispute Settlement Understanding, but with faster procedures.

Mediation mechanism

A mediation mechanism allows Parties to tackle adverse effects on trade in goods. The aim is not to review a measure's legality, but to find a quick and effective solution to market access problems. The Parties will be assisted by a mediator they have jointly chosen or selected by lot from an agreed list.

Protocol I - Rules of origin

Rules of origin define the 'economic nationality' of products needed to determine the duties applicable to them when traded. In the DCFTA, the rules are based on the usual criteria.

Protocol II-Mutual administrative assistance in customs matters

It sets out a legal framework for cooperation between the Parties' competent authorities in tackling customs irregularities and fraud.

Protocol III-Protocol on a Framework Agreement between the European Union and Ukraine on the General Principles for the Participation of Ukraine in Union Programmes.

It sets out core principles for Ukraine's financial contribution and participation in monitoring current and future EU programmes.

On January 26, 2015 Canada's Minister of International Trade, Ed Fast, and Ukraine's Minister of Economic Development and Trade, Aivaras Abromavičius announced renewed negotiations toward a Canada-Ukraine Free trade Agreement to promote growth and prosperity in Ukraine.

July 14, 20015 - in the framework of the working visit to Canada of the Prime Minister of Ukraine Arseniy Yatsenyuk, the document on completion of negotiations regarding the establishment of a FTA between Ukraine and Canada was signed.

The provisions of the draft Agreement on free trade between Ukraine and Canada provide, in particular, the deepening of trade and economic cooperation, including trade in industrial and agricultural goods, intellectual property protection and regulation of public procurement.

When the Agreement entries into force Canada makes free access to 98% of its goods market to Ukrainian exporters immediately. But Ukraine completely abolishing import duties will have a transition period before the liberalization of the market.

In the long term for the business the Agreement will be the opportunity to diversify trade flows, will be the impetus to modernize Ukrainian enterprises for the production of goods with high added value for the export to Canada.